Jamaica extends curve, saves on interest payments with new tap

NEW YORK, Aug 12 (IFR) - Jamaica's successful US$743m tap of
existing bonds Thursday funded a liability management exercise
that substantially pushed out the average maturity of the
sovereign's debt and reduced interest payments, said bankers.

The reopening of existing 8% 2039s, which priced on Thursday
at a cash price of 114.082 and a yield of 6.75%, funds a bond
buyback that was announced this week.

The Caribbean nation, rated Caa2/B/B, has agreed to buy back
around US$785m in principal of its 10.625% 2017s and 8% 2019s,
according to results of a tender offer announced on Friday.

The cash price of the reopened bonds is well above the
prices paid to buy back the 2017s and 2019s - 108.00 and 110.50
respectively.

This would lead to an estimated US$42m reduction in the
total debt stock of the sovereign, a source close to the deal
said.

"It is quite prudent of the government to take advantage of
global interest rates to take out (expensive) debt," said Sean
Newman, a senior portfolio manager at Invesco.

"They have been able to stick to their primary surplus
target and they certainly can be commended for fiscal prudence
in managing public sector accounts and getting debt to GDP on
downward trajectory."

Of the US$743m reopening, some US$364m came from new
investors, while the remaining came from holders of the 2017s
and 2019s switching into the longer maturity, the source said.

The deal will bring the total outstanding on the 2039s to
around US$1.2bn. The bonds were spotted trading at 115.55 -
116.15 on Friday morning.

Bank of America Merrill Lynch and Citigroup were the
bookrunners on the new issue and dealer managers on the tender
offer.
(Reporting by Davide Scigliuzzo; editing by Shankar
Ramakrishnan)